Queenco: What Remains Of Rhodes Earnings After The One-Off And What The New Lease Really Means
The main article argued that Rhodes is Queenco's operating engine. This follow-up shows that even after stripping out roughly EUR 2.4 million of one-off municipal income, Rhodes still delivered a real operating improvement in 2025, but the new lease resets the cost base with EUR 625 thousand of fixed annual rent and a EUR 6 million renovation commitment.
Rhodes Really Improved, But 2025 Still Does Not Give A Clean Base
The main article argued that Rhodes carries Queenco's operating story, while Cambodia still has to turn land into cash. This follow-up isolates what is easiest to misread inside Rhodes' own 2025 numbers: how much profit came from ongoing operations, and how much came from a one-off line tied directly to the lease renewal with the Municipality of Rhodes.
This matters because 2025 bundles three different moves into one year: genuine operating improvement, recognition of a municipal indemnity asset, and the near-full exit from the old bank debt that was prepaid after the balance-sheet date. A read based only on reported operating profit makes the year look too strong, but dismissing all of the improvement as one-off misses the point as well. Both reads are too flat.
Three points anchor the right read:
- Rhodes ended 2025 with EUR 19.0 million of net revenue and EUR 8.786 million of operating profit, but EUR 2.423 million of that profit came from other income.
- Even after stripping that item out, Rhodes still produced roughly EUR 6.363 million of operating profit, versus EUR 4.034 million in 2024. So the core business did improve, just not at the pace implied by the headline figure.
- At the same time, Rhodes' cost base is about to change: the old lease expires at the end of 2026, the new lease points to a 30 year term, EUR 625 thousand of fixed annual rent, and at least EUR 6 million of renovation spending.
| Rhodes, EUR millions | 2024 | 2025 reported | Adjustment | 2025 normalized |
|---|---|---|---|---|
| Net revenue | 17.023 | 19.020 | - | 19.020 |
| Other income | (0.017) | 2.423 | (2.423) | - |
| Operating profit | 4.034 | 8.786 | (2.423) | 6.363 |
| Operating margin | 23.8% | 46.2% | - | 33.5% |
The table and chart show why the 2025 headline still overstates the run rate. About 27.6% of Rhodes' reported operating profit came from an item that does not belong to the recurring operating layer. And yet the normalized figure matters precisely because it shows that the improvement was not just an accounting trick. Net revenue rose 11.7% to EUR 19.0 million, while wages edged down to EUR 5.245 million, maintenance costs fell to EUR 612 thousand, and selling and marketing costs slipped to EUR 1.530 million. Put differently, even without the one-off, Rhodes exited 2025 with a stronger operating engine.
Still, this is not a clean base for 2026. It is a transition year. Reported profit got a boost from a deal-related line with the municipality, while the future cost structure is not yet fully visible in the 2025 numbers.
The Municipal One-Off Is Not A New Cash Layer
In July 2024 the Municipality of Rhodes lost its appeal against earlier rulings on claims filed by the Rhodes subsidiary over excess municipal taxes collected in prior years. The claim was estimated at about EUR 1.8 million, or about EUR 2.4 million including interest at the balance-sheet date. On that basis the company recognized an indemnity asset of about EUR 2.4 million. On the consolidated statements this appears as NIS 9.074 million on the balance sheet under loans and receivables, and NIS 9.432 million in the income statement under other income.
The important point is that this is not an extra layer of cash waiting to come in. Under the draft lease renewal, the Rhodes subsidiary agrees to waive collection of that indemnity asset in exchange for fixing the annual rent, with no indexation and no rent escalation over the full lease term. In other words, the company pulled part of the economics of the new contract into 2025 through profit, but not through cash.
That makes the right read more precise. The company recognized today an accounting gain on a right that is being consumed inside the deal that will define Rhodes' operating cost structure for decades. It is therefore better read as part of the economic price of resetting the lease, not as recurring operating profit and not as fresh liquidity added to the group.
There is a second layer here as well. The company says the indemnity asset will be amortized over the lease term as part of the hotel's right-of-use asset. So the 2025 one-off does not disappear from the story entirely. It simply moves from an immediate profit item into a spread-over-time accounting effect once the new lease is in place. That is exactly why it should not be read as clean cash earnings.
The New Lease Buys Certainty, But Raises The Execution Bar
The positive part of the lease renewal is clear. Rhodes is not left operating on an asset that is nearing lease expiry. Instead, it is moving toward a 30 year agreement through the end of 2056. Rent is also set in advance with no indexation and no step-up over the term. For a tourism and casino asset operating on municipal property, that is real operating certainty.
The problem is the price paid for that certainty. The new fixed rent is EUR 625 thousand a year. For comparison, the entire rent line in the Rhodes segment in 2025 was only EUR 338 thousand. Separately, the company discloses that the beach-strip leases alone were EUR 153 thousand a year for the agreement that ended at the close of 2025, plus another EUR 21 thousand a year for an additional area leased for 3 years. That means the new fixed hotel rent on its own is already higher than the full rent expense the Rhodes segment showed in 2025.
And that is before the second commitment is added: at least EUR 6 million of renovation spending for the hotel. This is not routine maintenance. Rhodes invested only EUR 684 thousand in 2025. Put differently, the minimum renovation required by the new lease is 8.8 times the investment Rhodes made in 2025.
That matters even more because Rhodes is seasonal. The company itself says the third quarter accounted for about 42% of annual revenue in 2025, and winter traffic drops materially enough for the hotel operation to shut between November and April. So the new lease does not just change the level of rent. It also makes a larger share of the cost base fixed inside a business whose revenue is highly concentrated in the summer season.
There is another clue that 2025 still reflects the end of the old lease rather than the start of the new one. The carrying amount of the Rhodes hotel and beach right-of-use assets fell to just NIS 0.539 million at the end of 2025, from NIS 1.741 million a year earlier. In other words, the balance sheet entered 2026 with a nearly exhausted right-of-use asset just before a contractual reset that adds both a higher fixed rent and a new investment burden.
The Old Debt Is Also Leaving The Picture
There is one more angle that makes the 2025 earnings read easier than the real run rate. At year-end Rhodes still had only EUR 512 thousand left on the old Greek bank-consortium loan, and that balance was prepaid after the balance-sheet date. That is clearly positive: the collateral and guarantees tied to the loan are supposed to come off, and the company is removing an old debt layer that still carried the legacy of the 2015 restructuring.
But this point also needs precision. In the same note the company says the deposit required to secure the annual payment was not posted, which gave the bank grounds to call the loan immediately. That is one of the reasons the loan was classified fully as current. So the January 2026 prepayment does clear a financing overhang, but it also tells us that 2025 was the year of exiting the old structure, not the first year in which the new structure is already visible in full.
That is why the right Rhodes read for 2026 through 2027 has to separate three layers: the operating core that really improved, the one-off item that will not turn into free cash, and a lease and financing structure that is now being reset. Only the combination of those three layers tells us what really remains from 2025 earnings.
Bottom Line
Rhodes ended 2025 in a better operating position than it was in 2024. Even after stripping out the municipal indemnity asset, normalized operating profit still reaches EUR 6.363 million, well above EUR 4.034 million a year earlier. That means the casino and hotel did not need only an accounting line to show a stronger year.
But 2025 still does not provide a clean forward base. The municipal one-off is not new cash. It is part of the economics of the lease renewal. At the same time, the new lease gives Rhodes a long operating runway with no indexation, but it also inserts EUR 625 thousand of fixed annual rent and a EUR 6 million renovation commitment into a highly seasonal business. On top of that, the old bank debt was cleaned up only after the balance-sheet date.
So the more precise read is this: Rhodes proved in 2025 that the business itself improved, but it did not prove that reported profit is already the new earnings base. To reach that conclusion, the next reports will need to show two things together: that operating performance holds without the one-off, and that the new lease does not absorb the improvement through a meaningfully heavier fixed-rent and renovation burden.
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